In re Marriage of Cheriton - 92 Cal. App. 4th 269, 111 Cal. Rptr. 2d 755 (2001)

Rule:

As a general proposition, the key financial factor in the child support guideline formula is net disposable income. Nevertheless, relevant authority at least suggests that wealth is an appropriate consideration in setting child support. By statute, parents are required to provide child support according to their "ability," their "circumstances and station in life," and their "standard of living." Cal. Fam. Code § 4053(d), (a), (f). It is fair to assume that in most cases assets contribute to the ability to provide support. For purposes of spousal support, considerations include the ability to pay of the supporting party, taking into account the supporting party's earning capacity, earned and unearned income, assets, and standard of living.

Facts:

The husband and the wife initially separated in 1986, but reconciled in 1988. At the time of their reconciliation, the parties entered into a postnuptial agreement defining their property rights. The parties agreed that all of the husband’s income would be his separate property, except his salary and employee benefits, while half of the wife’s earnings would be community property. The agreement also required the wife to actively pursue employment to maximize her income. After the parties separated again in 1994, the husband petitioned for dissolution of the marriage. The trial court (1) made findings with respect to the husband's income and assets, including his stock and stock options; (2) made findings regarding the wife's income and earning potential and her assets; (3) imputed income to the wife based on her earning potential; (4) considered the effect on support of a trust established for the children by the husband; (5) analyzed the marital standard of living; (6) refused to impute income based on the parties' ownership of stock options; (7) ordered the husband to pay child support each month as specified; (8) established detailed procedures for future modifications of child support; (9) set spousal support for the wife with automatic reduction and termination provisions; and (10) ordered each to bear his or her own attorney fees. The trial court entered formal judgment consistent with its statement of decision. The wife appealed. 

Issue:

Did the trial court correctly determine the husband’s child support and spousal support obligations? 

Answer:

No.

Conclusion:

The instant court struck that portion of the judgment providing for future modification of child support and directed the trial court to include in its calculation of husband's gross income the entire gross proceeds from his 1997 sale of corporate stock and his income from royalties, dividends, and interest. The trial court was directed to consider imputing reasonable return on the husband's assets to the extent necessary to meet the children's reasonable needs, but without taking into account any contribution from a trust and without regard to an agreement capping housing costs. The trial court was directed to determine the children's needs by reference to the parents' ability to pay support, not by the children's historic expenses. Regarding spousal support, the trial court was directed to consider all applicable statutory factors under Cal. Fam. Code § 4320, including the husband's ability to pay. The trial court was directed to weigh the balance of hardships to the parties, including the disparity in their current living standards.